Will Airtel, Vodafone have to pay Rs 50,000 cr? SC order on AGR tomorrow

During a hearing in June, the DoT had told the apex court that telecom companies owed a total of nearly Rs 92,642 crore to the central government as on June 2019.
The Supreme Court is scheduled to pronounce its judgment in the contentious issue of the definition of Adjusted Gross Revenue (AGR) on Thursday. The fourteen year old case has the mobile operators locked in a legal battle with the government over the definition of AGR. It is the basis on which the Department of Telecom calculates levies payable by operators. Telecom companies pay around 3-5% and 8% of the AGR as spectrum usage charges and licence fees, respectively, to DoT.

The telecom companies contend that AGR should comprise revenue earned only from telecom services, while the DoT has been insisting that AGR should include all revenues, including those from non-core telecom operations. Bharti Airtel and Vodafone may have to collectively shell around Rs 50,000 crore if the judgment does not come in their favour.

The Cellular Operators Association of India had in 2005 filed the first case, challenging the government’s definition on calculation of AGR. It had contended that the components of AGR that the government was trying to include was contrary to the Telegraph Act and the recommendations made by the Telecom Regulatory Authority of India (TRAI).

Earlier, the Telecom Disputes Settlement Appellate Tribunal (TDSAT) had said that the non-core revenues of telecom companies, such as rent, dividend, profits on sale of assets among other things would be counted as a part of the AGR. The telecom companies had then approached the top court against this judgment of the TDSAT.

The TDSAT judgment had, however, exempted bad debt, foreign exchange fluctuations, and sale of scrap from the calculation of AGR.